Here's why government debt is different from regular debt

So you're looking at that huge 20 trillion debt the US has, and you think to yourself, if I had the same ratio of debt to income, I'd be totally broke. Well, the thing is that government debt works different from individual debt. Individual debt basically means you take money from a lender and the money moves from the lender to you. The lender actually counts this money as an outflow. They can sell your debt to other lenders, but in general they make sure that they count the money as "gone." This is because each individual, no matter how high their credit score, is not completely trustworthy. Even a person with an 800 credit score can lose a job overnight. 

Here's the thing. Governments borrow money through a thing called a "bond." Each bond is like an IOU that the government gives you after you give them your hard earned cash. When the bond "matures," you get that money back plus a small amount of interest. But the funny thing is that the US government is so "trustworthy" that these bonds are almost as good as actual cash. The market for US government bonds is actually called the "money market." So here's the catch. When you give the government your money through a bond, you are not losing that money. You are exchanging it for a commodity or a "meta currency." a 100$ bond is worth 101$. You can sell that bond almost immidiately and your money is returned. This is because, crucially, the US government is trustworthy. Nothing short of a total economic collapse will cause the US to renege on its debt. And in that case you'd have bigger things to worry about. 

So that debt? It's not actually debt in the personal sense. It's basically a way of taxing individuals (and even other countries) without making them feel like you've taken their money. The actual debt number is a formality. It only becomes a problem when the number is so high that people lose their trust in the bonds. Until that happens, it's possible for the government to continue borrowing, borrowing, borrowing. I'm not saying it's a good thing, but just that it's a clever method of undercover taxation that, to the taxed, feels like an investment.

When you exchange 100$ for a 100$ bond, most individuals do not feel like they are losing that money. They don't count it as outflow. In fact, they tend to count it as a safe way to earn a small percentage back on that investment. That 100$ bond is worth 100$ at almost all times and is easy to liquidate. Thus, a meta currency. You can try to do the same with bonds given to non-government entities, but there just aren't enough 850 credit score individuals who take out loans. Read: 2008 subprime mortgage crisis. The government is a near-infinite source of (probably) safe loans. Buying corporate debt in the same way is more dangerous. Because of this the interest rates are higher, but in the end, government debt is safe. That's what powers the government. Safety. A US treasury bond is a safe place to park your cash for the long term and earn a little bit of interest. Until that changes, the US and other world governments will be able to continue borrowing indefinitely and will never have to pay their debt back. 

But when trust in that debt collapses, which it may in the future, be prepared for utter societal chaos. Until then, though, the government's debt number doesn't actually mean anything.